Almost every year, in a particular season, NBA players become free agents in the market. Once the NBA trade deadline has happened, the NBA buyout market becomes active, where players and their teams agree to part ways.
Most times these players are the veterans and the buyout process is quite straightforward. Read on to learn more about the NBA buyout market.
What is an NBA Buyout?
Simply put, this is a process that involves a player and a team parting ways. In this case, the two parties agree to part ways and the player is expected to pay a certain amount of money as specified in the contract. This helps to accommodate the move.
The players and teams agree on the terms of the buyout and then proceed to waive it. The players are expected to clear their waivers after which they are free to begin their career forty-eight hours later with their chosen team.
It is also worth noting that buyout can happen when the players want to be free agents without the approval of their team. Other times, the team may be willing to release a veteran to allow a younger player to join the team.
Reasons for NBA Buyout
Buyouts can happen for several reasons, such as;
- To create a win-win situation where the player opens to explore new opportunities while the team cuts the cost of the player’s salary.
- When teams do not get a trade during the deadline for one of their players that wants to leave.
- When the team gets a veteran player in a bid to compete but the player's performance is below expectations.
- When the team acquires players during the trade but does not consider long or short-term futures.
The Next Step
When there is a mutual decision to split, the player is then waived. Next, there will be a negotiation as to what aspect of the contract will be forfeited to set the player free.
There are situations when the player will need to forfeit everything to go. Other times, it will be a portion of their pay that is forfeited. There is no one size fits for this negotiation aspect as it works differently for each case.
A waived player is unrestricted and becomes a free agent that can work with any interested team.
What is a Waiver?
Now that we have understood the basics of NBA buyout, let's see what waivers are and why they are so important. Waivers represent a forty-eight-hour period during which NBA teams can bid for a player.
If the bid is won then the player will no longer be a free agent but will now belong to the winning bidder. The team that made the bid must fit the existing contract of the player into their payroll before the player is fully released. The new team will now have to continue the player's contract.
The old team to which the waived player belonged can wipe off or reduce the player's salary based on their agreement. This is usually the fun part of the buyout proceedings.
The payroll of most NBA playoff teams is usually flooded so the highest they can give may just be the minimum of veterans pay which is around $2.3 million based on the experience of the player.
For example, Wesley Matthews was traded into the Knicks during the Porzingis deal. Matthew failed to consider his long or short-term future so there were expectations that he and the Knicks team would agree on a buyout.
His estimated annual salary should be $18 million so the Knicks will have to compensate him at a pro negotiated rate for the year. If he clears his waiver, then Matthew becomes a free agent and can join whichever team he wants.
The Categories of NBA Buyout Players
Buyout players can be grouped into different categories as they are not all equal.
Veteran players are those with more playing experience but are aged. They can also be players that have encountered injuries that made them unable to actively play.
- Trade Packages
NBA teams may choose to exchange their players in the market. In this category, the groups decide if they will reject or accept the players. If a player is not accepted into any team then they are free.
- High Maintenance Buyout Players
This is when the players signed in perform beneath expectations so they are termed high maintenance. The group will likely release them into the market.
Can Players Request a Buyout?
So far, it seems like only the team decides when they want a buyout but that is not always the case as the player can also request for a buyout. The only difference is that a player's requested buyout is not always guaranteed.
Jahlil Okafor, one of the NBA players last season requested a buyout but his request was rejected by the 76ers. He eventually was traded out by Philadelphia to Brooklyn.
The Fate of the Old Contract
When a player signs into a new NBA team, their old team will have to complete the terms of their contract as agreed. Last September 2018, Dwyane Wade agreed to go separate ways with his Chicago Bulls team.
They reached a compensation agreement of $8 million out of his initial $23.8 million contract for the season. So in summary, he had to forfeit $15.5 million to move on. How sad is that?
The Period of NBA Buyout
Technically this market is almost always open. However, its activity is heightened after the passing of the trade deadline. During this period, contenders seek out their last opportunity to boost their roosters.
March 1 marks the end of the market period because it is the final day for the player who was bought out to find a new NBA club so they can be eligible for the next playoffs competition.
It is important to note that there is a difference between a free agent from a buyout and one who was not signed into any former team.
The Restrictions in NBA Buyout
There were loopholes in the buyout process and this prompted certain restrictions to be instituted in the process in the year 2005. A player is no longer allowed to go back to their former team for 30 days after they have been traded.
However, this rule did not last long. In 2010, there was an extension of the period within which a player must continue in their new buyout team. The period was extended to one year before they are allowed to return to their previous team.
In summary, teams are prohibited from signing an NBA player during the season they were traded.
What Benefits do Teams Have for Terminating a Player Contract and Trading Them Out?
Teams benefit from trading out by saving costs since, in most cases; they end up paying part of the initial contract amount. Sometimes they do not even pay anything at all.
Another reason why a team may decide to trade off their players is a bad timeline. The team may desire to buy a young player in season and their current veteran players may be a hindrance.
These teams also take in players many times without the intention of retaining them so they end up signing them out after a particular deal.
There are also times when the players do not wish to stay anymore so the team has to honor their will. This way, they are in the good books of the players and can benefit from future trading pursuits with them.
2021 Buyout Market Highlights
Significant changes were noted last year among the topmost NBA strongest teams. Let's look briefly into them.
The Brooklyn Nets:
- LaMarcus Aldridge
LaMarcus's due contract with San Antonio Spurs was $24 million but he was only given $7.25 million to make the buyout easier. He signed in with the Brooklyn team and received $1,229,676 from them until the season came to an end.
- Blake Griffin
Just like LaMarcus, Griffis; contract with the Detroit Pistons was due $36.8 million. He agreed on a sign-out deal where he will be given $13.3 million. Brooklyn Net took him in with an agreed payment of $878, 340.
Drummond Andre signed with the popular Lakers team to complete last season. His salary was agreed to be $794,536. Before this, he had a contract with the Cavaliers Cleveland team where he was being paid $28.8 million each season.
The Flip Side of the Coin
These buyouts of course have several benefits in the big market. However, some fall into the negative end of the bargain.
Using the example of the Detroit Pistons, they were able to save up some money to pay their players full salaries. However, some critics believe that this buyout mechanism is unfair as some NBA teams buy superstars at a costly price but the players in return do not get as many benefits. This begs the question of whether they are being used mostly for the teams' benefits.
Generally, a switch up of roosters helps in developing the young players as they are given ample time to mature and play. However, the reality of the market is still unfair. The collective bargaining agreement of the NBA will be renegotiated in the year 2024 as said. This will hopefully control the market’s reality.
2022 NBA Buyout
The 2022 deadline is now past so here is the list of some of the veterans that were released or bought out and their new teams;
- DeAndre Jordan: Released from the Lakers and signed up with the Sixers.
- D.J Augustin: Released from the Rockets and signed up with the Lakers.
- Tomas Satoransky: Bought out from the Spurs and signed up with the Wizards.
- Jevon Carter: Released from the Nets and signed with Bucks.
- Kevin Pangos: Bought out from the Cavaliers and signed up with CSKA Moscow.
- Goran Dragic: Bought out from Spurs and signed up with Nets.
- Tristan Thompson: Bought out from Pacers and signed up with the Bulls.
- DeAndre’ Bembry: Released from Nets and signed up with the Bucks.
After reading through this article, we hope that you were able to better understand what the NBA market stands for and how things are done during the buyout process.
Over the years, this buyout market has been known to issue diverse surprises even at the last minute. Therefore, it is necessary to stay updated on the current happenings.
While we anticipate the outcome of the 2024 bargaining agreement, we will in the meantime continue to shower our love and support on the players and upcoming tournaments. May the best team always win!